How India improved its Ease of doing business ranking under Modi government

The Modi government came to power in 2014 with the agenda of ‘Sabka Saath, Sabka Vikas’ and it knew very well, that economic growth is very important to achieve development objectives. For decades the country operated on Amartya Sen model of development where growth is given less importance. But it didn’t work when it came to uplifting people from poverty. Therefore, the Modi government opted for ‘growth model’ for development. For economic growth it is necessary to make business operations easy, when Modi government came to power India ranked 142 out of 189 economies in the World Bank’s Ease of Doing Business Report. Prime Minister shared a vision to bring the country amongst top 50 nations in the ranking and worked consistently in the last four years to achieve the goal. The reforms of the last four years resulted in a jump of 65 positions to 77th from 142nd.

The country has moved up by thirty places last year and 23 places this year. According to the report, India is among the top ten economies improving most in three or more measures this year. Ministry of Commerce and Industry in an official statement said, “ India has improved in rank in six out of ten indicators and has moved closer to international best practices…The most dramatic improvements have been registered in the indicators related to ‘construction permits’ and ‘trading across borders’.” The country registered most significant improvement in ‘dealing with construction permits’ rank this year. Last year India had 181st position, one of the lowest and now the ranking is 52. The ranking improved due to many reforms taken in the sector, the number of procedures for construction permit came down to 17.9 from 30.1 and number of days for a permit was reduced to 94.8 from 143.9. The cost of the permit as percentage of warehouse value came down to 5.4 percent in comparison to 23.2 percent last year.

The ranking for ‘trading across borders’ saw second highest improvement after construction permits, it rose to 80 from 146 last year. Ministry of Commerce and Industry, has been proactive in making imports and exports easy. The time and cost for import and export in terms of documentation which largely moved online and border compliance has also been made more efficient. The World Bank report also praised taxation reforms and streamlining of business processes. “India made starting a business easier by integrating multiple application forms into a general incorporation form. India also replaced the value-added tax with the GST (Goods and Services Tax) for which the registration process is faster,” said the report. The report also praised government efforts to solve NPA problem through IBC process, the report said the establishment of debt recovery tribunals in India “reduced non-performing loans by 28 per cent and lowered interest rates on larger loans, suggesting that faster processing of debt recovery cases cut the cost of credit”. India has witnessed ranking improvements in 6 measures out of 10 while it deteriorated a little in the rest. However, overall ranking of India improved most among major economies across the world.

India is now the highest ranked nation among South Asian countries in Ease of doing Business index. The sheer size of country with diversities matching those of a continent is matched by few countries and it is not easy for a country with such complexities to achieve such a good ranking. India has improved most among the BRICS countries in the last four years. The two other countries which improved their ranking are Russia (31 ranks) and Brazil (11 ranks) but their improvement is not even half of India. On the other hand our neighbor China has witnessed a dip of 27 ranks in the last four years, it slipped from 19th rank to 46th rank. The ranking of South Africa also moved southward due to political turmoil and corruption in the country which hindered economic reforms, its ranking has gone down by 39 ranks, from 43 to 82. The ranking improvement will enhance the image of India among global business leaders and more companies will like to move to India. This will give fillip to the Indian economy and the country might be able to achieve double digit growth in the upcoming years.